—Payroll & Labour Law Compliance
Gratuity, Bonus & Other Statutory Compliance
Computation and compliance support for gratuity, bonus and related statutory payments.
Handled by a practising Chartered Accountant or Company Secretary.
Scope of work
Computation and compliance support for gratuity, bonus and related statutory payments.
Key deliverables
- Computations and compliance records
Governing law
Payment of Gratuity Act, 1972; Payment of Bonus Act, 1965; Labour Codes
Frequency
Annual / As required
REGISTRATION ONLY
Gratuity, Bonus & Other Statutory Compliance
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- Computations and compliance records
REGISTRATION + COMPLIANCE CARE
Gratuity, Bonus & Other Statutory Compliance + Compliance Care
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+ ₹9,599/yr for year-one ROC compliance
- Computations and compliance records
- Financial statements in Schedule III format
- Board report and AGM notice
- Filed AOC-4 with SRN
- Filed MGT-7 / MGT-7A with SRN
- Board and AGM minutes
500+
Companies incorporated
100%
CA/CS-signed filings
4.8/5
Founder rating
—A closer look
Understanding gratuity, bonus and statutory compliance
Everything below is written for employers — who is entitled to gratuity and statutory bonus, how they're calculated, and the other labour law obligations that come with employing people.
What is gratuity, bonus and other statutory compliance?
Beyond salaries, PF and ESI, Indian labour law requires employers to pay certain statutory benefits — gratuity on leaving after qualifying service, and an annual statutory bonus for employees within the wage limit — and to meet obligations like maternity benefit, minimum wages, registers and POSH compliance.
These rules were in separate Acts, and are now consolidated into the Labour Codes, which came into force in November 2025. The Codes change some details, like gratuity for fixed-term employees, and the wage definition used in calculations.
The key terms
The main statutory benefits:
- Gratuity
- A lump sum on leaving, generally after five years' continuous service, calculated at 15 days' wages for each completed year.
- Fixed-term employees
- Under the Code on Social Security, fixed-term employees become eligible for gratuity after one year.
- Gratuity ceiling
- The maximum statutory gratuity, currently ₹20 lakh, subject to revision.
- Statutory bonus
- An annual bonus of between 8.33% and 20% of wages for employees within the wage limit, linked to profits.
- Bonus wage limit
- Employees earning up to ₹21,000 a month are generally covered, with calculation on a capped wage.
- Maternity benefit
- 26 weeks of paid maternity leave for eligible employees, with crèche facilities above a threshold.
- POSH
- The law requiring an Internal Committee and policy to prevent sexual harassment, for employers with 10 or more employees.
A simple example
A Hyderabad IT services company with 150 employees had never provided for gratuity in its accounts, and paid a flat Diwali bonus unrelated to the statutory calculation. A review sets up an actuarial valuation of the gratuity liability, a gratuity trust with an insurer-managed fund, and a bonus calculation for covered employees. It also finds fixed-term contract staff who are now eligible for gratuity after one year under the Labour Codes, and updates contracts and provisions accordingly.
Why it matters
These obligations are easy to overlook:
- Employee rights
- Employees can claim unpaid gratuity and bonus, with interest.
- Accounting provisions
- Gratuity liabilities must be provided for, usually based on actuarial valuation.
- Labour Code changes
- The new wage definition and fixed-term rules can increase liabilities.
- Inspections and claims
- Labour authorities can inspect and order payment.
- Cash planning
- Funding gratuity through a trust or insurer spreads the cost.
- POSH penalties
- Failing to set up an Internal Committee attracts penalties.
- Due diligence
- Unprovided gratuity and missing compliances reduce valuations.
Who is this for?
- Employers with 10 or more employees
- Businesses without gratuity provisions or funding
- Employers using fixed-term contracts
- Businesses unsure of bonus coverage
- Companies preparing for audit or due diligence
Rules under the Labour Codes are still being finalised by the central and state governments; we apply current notified rules.
Gratuity and bonus compared
The two main statutory payments:
| Aspect | Gratuity | Statutory bonus |
|---|---|---|
| When paid | On leaving, retirement, death or disablement | Annually |
| Eligibility | Generally 5 years' service; 1 year for fixed-term employees | Covered employees who worked at least 30 days in the year |
| Amount | 15 days' wages per completed year | 8.33% to 20% of capped wages |
| Cap | ₹20 lakh currently | 20% maximum |
| Timing | Within 30 days of becoming payable | Within 8 months of the year-end |
What we'll need from you
- Employee data
- Joining dates, salaries and contract types.
- Salary structures
- To determine wages under the Codes.
- Financial statements
- For bonus allocable surplus calculations.
- Existing provisions
- Gratuity provisions and any funding.
- Policies
- Leave, maternity and POSH policies.
- Registers
- Existing statutory registers.
Pricing depends on headcount and the scope of compliance covered.
How we handle statutory compliance
Our approach:
- 1
Review
We review headcount, contracts and structures against each law.
- 2
Calculate
Gratuity liabilities and bonus entitlements are calculated.
- 3
Fund
We help set up gratuity funding through a trust or insurer, where useful.
- 4
Document
Policies, nominations and registers are put in place.
- 5
Pay
Payments are processed on time with correct tax treatment.
- 6
Monitor
We track Labour Code rule changes and update compliance.
Keeping compliant
Recurring obligations:
- Annual bonus
- Calculate and pay statutory bonus within the time allowed.
- Gratuity valuation
- Update the actuarial valuation each year.
- Nominations
- Collect gratuity nominations from employees.
- POSH reports
- Hold committee meetings and file the annual report where required.
- Registers
- Maintain statutory registers and records.
- Exits
- Pay gratuity within 30 days of it becoming due.
Benefits and responsibilities
Benefits
- Correct gratuity and bonus calculations
- Liabilities properly provided and funded
- Labour Code changes applied
- Policies, registers and POSH in place
- Fewer claims and inspection findings
Responsibilities
- Share accurate employee data
- Fund payments on time
- Approve policies
- Maintain the POSH committee
- Collect nominations
- Tell us about contract type changes
—FAQ
Questions employers actually ask us
Generally not for permanent employees, except on death or disablement. Fixed-term employees are eligible after one year under the Code on Social Security.